Making an Offer to Purchase is a very important step in the home-buying or home-selling process. The Offer to Purchase is equally important for the buyer and the seller and therefore should not be taken lightly by any of the parties involved.
It is an agreement containing the terms and conditions of the sale and the purchase. Once signed, it constitutes a Deed of Sale, being the foundation of the legalities of the entire transaction.
With all this in mind, you (being the seller or the buyer) should carefully review every detail before signing the offer.
Basic Details:
Start by checking the basic details because even a small typing- or spelling error could lead to the contract being a null and void.
Parties – The details of both the seller and the buyer.
Date of Offer – This date is very important if the termination of the offer is defined according to this date.
Price Offered – Make sure that the amount is written correctly.
Commissions – The exact amount of commission should be stated in the offer.
Property description – Check the property address as well as the erf number.
Dates:
Date of occupation:
This is the date on which the buyer will be occupying the property and if agreed upon, might be before the date of transfer.
Offer expiry date:
This date places some pressure on the seller to make a decision and accept the offer. If not accepted by the expiry date, the offer becomes null and void.
Occupational rent:
Occupational rent is a monthly rent payment by the seller or the buyer. This allows the buyer to occupy the home before registration takes place, but also allows the seller to stay in the home after registration if agreed on by both parties.
The amount and dates must be clearly detailed. The clause should include a provision that the amount due will be prorated if the transfer is finalised earlier than the date when an occupational rent payment is due.
Fixtures and fittings
Fixtures and fittings, anything nailed, glued or screwed down, are deemed to be part of the property as a whole. The seller and buyer should go through the house together and get certainty about all items, such as curtains, mirrors, pot plants etc. All such items should be listed separately in the contract to avoid confusion and problems later on.
Conditions of sale (Defects, faults and renovations)
The Conditions of Sale can suspend the sale until the conditions have been met. The most common condition is the approval of the home loan by the buyer’s bank. There should be a realistic time limit (usually anything between 5 and 10 days) and the time limit should be agreed upon.
Deposits
Buyers sometimes pay a deposit as a sign of good faith. The deposit is held in an interest bearing trust account until the date of transfer. The amount of the deposit needs to be stated in the Offer to purchase as well as that the buyer is entitled on the interest earned when the deposit is released.
Certificates
An Electrical Compliance Certificate is required by law. The buyer and the seller should agree on any other additional certificates such as engineering reports or pest reports and these additional certificates should also be listed in the Offer to Purchase.
Cooling-off period
A cooling-off period is usually enforced on properties with a value of less than R250 000, but can be legally included on any property if both parties agree to such an inclusion. Check the duration of the cooling-off period, it should not be longer than five days.
Suspensive conditions
The Offer to Purchase is based on the suspensive conditions. These conditions include:
- The ability of the buyer to secure a home loan for the amount of purchase.
- The sale of the buyer’s existing property.
- An assessment of the property’s structure, floods, damp, pest etc. The Offer to Purchase should clearly state if the buyer or the seller will pay for these assessments.
- All of these conditions should have their own specific due date attached. Be sure to check these dates as well.
72 Hour Clause
A 72 hour clause allows the seller to market the property after an Offer to Purchase (which is subject to suspensive conditions) has been accepted. This is often included in an Offer to Purchase but allows the buyer 72 hours to fulfil the suspensive conditions on the original Offer to Purchase. The seller must notify the existing buyer in writing, giving him/her 72 hours to fulfil the suspensive conditions. You should carefully check the wording of the 72 hour clause to ensure that it is equitable.
If any uncertainty remains regarding the Offer to Purchase, you are advised to rather solicit the opinion of a legal professional.